Senate vote on TikTok 'up in the air' after House approval

Wed, Mar 13, 2024, 9:20 AM

TikTok has found itself at the center of a heated controversy, as the House of Representatives recently passed a bill that could potentially lead to a complete ban of the app in the United States. To discuss the implications of this move and what it means moving forward, China Beige Book International Managing Director Shehzad Qazi and Freshfields CFIUS & National Security Advisor Colin Costello, joins Yahoo Finance Live.

Qazi acknowledges that the House was "very clear" in their intent to pass this bill. However, he notes that with a Senate vote on the bill still looming, its fate remains "up in the air," suggesting that the bill has a chance to "just die in the Senate."

Costello identifies three variables that the government uses to "understand national security risks:" threat, vulnerability, and consequence. He explains that in TikTok's case, the threat stems from ByteDance, the foreign parent company. The vulnerability lies with TikTok's US segment, which could be "susceptible to exploitation by a foreign adversary." The consequence would be the potential exploitation of millions of US users' data on TikTok.

For more expert insight and the latest market action, click here to watch this full episode of Yahoo Finance Live.

Editor's note: This article was written by Angel Smith

Video Transcript

RACHELLE AKUFFO: Well, with that in mind, the US House of Representatives passing that bill that would force the Chinese company ByteDance to divest from the social media giant TikTok. Joining us now on the implications of this legislation are Shehzad Qazi, China Beige Book International managing director, and Colin Costello, Freshfields CFIUS & National Security Advisor. Welcome to you both here.

Now, obviously, going into this, when we saw that House panel, first, have that, you know, no opposition to this, we did expect it at least to still have that support in the House. Shehzad, I want to start with you, though. In terms of the support that we might see then as we head to the Senate, is there the same appetite for this here?

SHEHZAD QAZI: Well, definitely not. You know, the House was very clear that this was going to pass, given the amount of work over the last year and a half that the select committee chair and ranking member Mike Gallagher and Raja Krishnamoorthi have put in behind the scenes. The Senate is a different ball game, and it's pretty much up in the air right now whether it passes.

I think how former President Trump potentially changes his stance-- if he softens up, I think it has a good chance of passing, but if his opposition remains firm, this may just die in the Senate.

AKIKO FUJITA: Colin, this is something that you're very familiar with, given your involvement during the Trump administration. I realize you can't weigh in specifically on the ban that was proposed under that administration. But at the core of the debate over the years with TikTok, it has been about the national security concern, the data collection that happens on the app. Is this about evidence that points to the Chinese government having used that data, or is it about the potential risks that could come with allowing that, in other words, there's not necessarily the evidence, but the potential of that is really high?

COLIN COSTELLO: Certainly. So if you look at how the government understands national security risk, it really looks at it in terms of three variables. Those are threat, vulnerability, and consequence. And so the threat is going to be the foreign person, in this case, ByteDance.

The vulnerability is going to be some aspect of the US business, the US operations of TikTok that might make it susceptible to exploitation by a foreign adversary. And then the consequence is how those two variables are going to interact with one another. And here, given that, depending on whose estimates you believe, TikTok has between 150 and 170 million US users, that consequence of exploitation could be potentially quite enormous.

So previously, the focus seems to have been on reducing the vulnerability of TikTok. This is what has been done by TikTok in terms of what they call Project Texas, working with Oracle. But apparently, the Congress has determined that that's not moving fast enough, and so they're going to now try to address the threat aspect of this, which is to say, they are going to force ByteDance to divest TikTok or else face, effectively, a ban in the US, thereby removing the threat actor.

And I think from the perspective of the government, whether or not they have access to classified information that suggests that this app has been used by the Chinese government to obtain information, the latent capability exists simply because the Chinese government does have broad legal authorities to compel cooperations in matters of national security. So from the perspective of someone who views the Chinese government as an adversary and as a very capable adversary, the question is not has it been used, but can it be used? And the answer to that, I think, from the perspective of the people who wrote this bill is yes.

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Senate vote on TikTok 'up in the air' after House approval

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